Monday, January 3, 2011

Was the industrial revolution mainly about the growth of manufacturing industry?

Some readers may think this question is like asking whether the Pope is a Catholic. The question is worth considering, however, because it raises some fairly common misconceptions about the industrial revolution (some of which I held until recently).

My main reason for reading about the industrial revolution has to do with my interest in human flourishing. The industrial revolution led to a massive, unprecedented and ongoing improvement in living standards, beginning in Britain and then spreading to other parts of the world. From that perspective, the industrial revolution tends to be associated with the advent of sustained economic growth.

However, Joel Mokyr suggests that the best available estimates indicate that growth in per capita income in Britain did not accelerate until the decades after 1830 - well after the beginning of the industrial revolution (‘The Enlightened Economy’, p 256). That makes sense if we define the industrial revolution in terms of the technological innovations which brought about a transformation in the way goods and services were produced in the British economy between 1760 and 1830. One reason why these innovations were not immediately reflected in higher per capita income growth was the rapid growth of population – the English population increased from 6.1 million to 13.1 million between 1760 and 1830 (p.257). Another reason was the initial concentration of major innovations in a relatively small, though rapidly growing, part of the British economy (p. 82).

Information from a table presented by Deirdre McCloskey is graphed below in order to provide some perspective on the contribution of different industries to productivity growth in Britain over the period from 1780 to 1860 (‘Bourgeois Dignity’, p.219).

Figure 1 shows the relatively rapid growth of productivity in some manufacturing industries as well as canals and railways.

Figure 2 shows that despite the more modest productivity growth rate in agriculture, the relatively large size of this sector means that over the period considered its contribution to overall productivity growth was comparable to that of the manufacturing industries with more rapid productivity growth.

So, was the industrial revolution mainly about the growth of manufacturing industry? Perhaps, if we define the industrial revolution so narrowly that it has to refer to the growth of manufacturing industry. If we do that, however, we need another term to describe the processes leading to the advent of economic growth in Britain. Joel Mokyr’s term, the industrial enlightenment, aptly describes the broader processes through which a social climate favourable to innovation was made possible by growing recognition that material progress could be achieved through advances in science and technology.

Mokyr puts the various phases of the industrial revolution in context as follows:

‘The Industrial Revolution was above all a beginning. It cannot be judged on its own grounds without considering what it led to. What is truly significant is not the wave of great inventions made in the years between 1765 and 1800, but the fact that this process did not subsequently fizzle out. Some societies, in Europe and Asia, had witnessed previous clusters of macroinventions, leading to substantial economic changes. ... The “classical” Industrial Revolution in the eighteenth was not an altogether novel phenomenon. In contrast, the second and third waves in the nineteenth century, which made continuous technological progress the centrepiece of sustainable economic growth, were something never before witnessed and that constituted a sea change in economic history like few other phenomena ever had’ (p. 83-4).

Postsript:
I would like to draw attention to Deirdre McCloskey's comment below.

I would also like to draw attention to this video by Hans Rosling on You Tube.

4 comments:

Joel puts it just right. What was astounding was the continuation. Income per head in Britain had doubled in the eighty years down to 1860. Good. Glad to have it. But then it doubled and doubled and double again, even if one measures real income in a way that does not take account of the quality of goods. As Joel says in his book, and as I say in Bourgeois Dignity: Why Economics Can't Explain the Modern World, and as Jack Goldstone and Eric Jones have said, what amazes is that it didn't wilt like other "efflorescences" (Jack's word). The debate about growth in Europe before the Industrial Revolution seems to us strange. that British and Dutch incomes were twice that of Italy is, again, swell, but is not the main event, which is the Great Fact of 2000% growth in the real condition of poor people, 1800 to now.

Per capita income is not a good enough measure. Some more interesting results can be gleaned from looking at things like meat consumption, caloric intake, and things like that. When those records are taken into effect, then there is no way to deny that even the beginning of the industrial revolution was a time of previously unmatched growth and prosperity.

Hi Tony. I agree about the desirablity of loking at things other than per capita income. However, the collection of factors discussed by Joel Mokyr - which looks fairly comprehensive - doesn't seem to support the contention that living standards improved right from the beginning of the industrial revolution. Regarding meat in particular he cites Clark, Huberman and Lindert (Econ Hist Rev, 1995, p 223) as suggesting that 'meat consumption per capita certainly did not increase'. At that point the discussion seems to relate to the period 1750 to 1850. Is there better information available?

The fact that a lot of people moved to the industrial centres suggests to me that these centres probably offered the potential for higher living standards. But it is possible that overall living standards would otherwise have declined as a result of population pressure.

There are a few factors to consider. First, problems with housing were due to artificial shortages because of building codes of the day (T.S. Ashton in Capitalism and the Historians). Secondly, realize that conditions in the factory are not sufficient to prove whether or not living conditions improved. These people were coming from the country and had previously been subsistence farmers. Lastly, we have to accept the issue of enclosure. The British Parliament basically kicked people off of land and forced them into working for factories. For these people, it's hard to say conclusively that their standard of living increased. But the others? I don't think there would have been such a large movement unless they knew that they were leaving for a higher standard of living.

As for this paper from Clark, Huberman, and Lindert, I find it seriously flawed. Their conclusions are based on the idea that meat supplies should be proportional to income. However, standard of living can increase even if meat consumption falls. If people spend more on housing, they have less for food, but could still have a greater standard of living. I think in this case, many economists of the period ignore the serious benefits of living in the city as compared to living in the country, and because of this their analyses are flawed.

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